Leveraging Medicaid to Reduce Youth Homelessness

Health Highlights

Editor’s Note: Youth with behavioral health needs, particularly those receiving residential and inpatient treatment, are at significantly greater risk of homelessness. Among children 16 and younger, 1 in 10 who are leaving a public health system of care—such as foster care, residential behavioral health or the criminal justice system—will be homeless within 12 months. In a new analysis developed for the Raikes Foundation, summarized below, Manatt Health presents specific strategies to address youth and young adult homelessness following an institutional or residential stay for psychiatric and/or substance use disorder. Click here to download a free copy of the full analysis.


Youth with behavioral health needs—particularly those receiving residential care—are at high risk of homelessness. One in 10 of all young adults between 18 and 25 and at least 1 in 30 adolescents ages 13–17 experience homelessness over the course of a year.

Among youth and young adults with behavioral health needs, certain youth and young adults face an increased likelihood of experiencing homelessness. For example, LGBTQ youth are at more than double the risk of homelessness compared to their non-LGBTQ peers and tend to receive residential treatment for mental health issues and substance use disorders at disproportionately high rates. Youth involved in the child welfare system also face an increased likelihood of hospitalization for psychiatric issues and homelessness. COVID-19 has exacerbated existing problems, leading to an increase in unmet needs for behavioral health services among youth and homeless youth.

Key Issues Driving Increased Homelessness Among Youth With Significant Behavioral Health Needs

A number of factors are driving the high homelessness rates among youth with significant behavioral health challenges, including:

  1. Lack of continuum of care. Gaps in the continuum of care can result in a youth receiving residential/inpatient care rather than community-based care, even when residential/inpatient care is not clinically appropriate. The availability of community-based care or alternative crisis services would reduce the unnecessary utilization of residential care.
  2. Reliance on residential care for placement. Residential/inpatient treatment is too often used as placement for certain populations, such as LGBTQ youth, instead of as a last resort for treatment. The disruption and dislocation associated with an institutional stay can increase the risk of homelessness, especially if young people are released back to unstable families or living situations.
  3. Lack of available and affordable housing. Shortages in housing, housing supports and independent living programs are a foundational driver of homelessness among youth who require additional supports to reside in community settings. Many high-risk youth lack access to a safe place to live in their families of origin and do not yet have the ability to find and finance housing.
  4. Cross-system fragmentation. Multiple child-facing systems are involved in supporting youth with behavioral health needs, leading to diffusion of responsibility and confusion over which agency is in charge. As a result, children and youth are moved repeatedly across systems, often without coordination even during transitions.
  5. Youth discharged to streets from inpatient or residential treatment. A shortage of appropriate home- and community-based services can lead to inpatient and residential providers discharging youth, even when they lack a viable place to stay.
  6. Inconsistent oversight of behavioral health policies. Requirements exist on paper rather than in practice due to limited oversight and enforcement. For example, a state might have a law that says inpatient hospitals cannot discharge youth into homelessness, but it still may be occurring.
  7. Inadequate engagement of family and loved ones. Lack of family education and engagement makes it difficult to support youth transitioning out of residential care.

Increased Attention on Youth’s Behavioral Health Needs

National calls to expand behavioral health care to address the crisis facing youth have become increasingly urgent, driven by the tremendous increase in need among adolescents. In early 2021, emergency room visits in the United States for suicide attempts were 51% higher for adolescent girls and 4% higher for adolescent boys than during the same period in 2019. While already in place prior to the pandemic, COVID-19 clearly has exacerbated the crisis by making it harder for young people to participate in school and regular activities, as well as by creating disruption and loss for many families.

In his March 2022 State of the Union address, President Biden urged Congress to “take on mental health, especially among our children.” His was just the latest call to address the crisis. In December 2021, the surgeon general issued an advisory on the mental health crisis facing American youth. In October 2021, the American Academy of Pediatrics, the American Academy of Child and Adolescent Psychiatry, and the Children’s Hospital Association joined forces to declare a national emergency in child and adolescent mental health—and called on policymakers to act.

Several strategies are available for states to leverage Medicaid and other tools to respond to these increasingly urgent calls to address the crisis facing youth.

Key Principles for States Seeking to Strengthen Their Behavioral Health Systems

There are several principles states can use to strengthen their behavioral health systems and divert youth with behavioral health needs from inpatient/residential care, shown to increase their risk for homelessness. To address behavioral health issues among youth more effectively, states can ensure their behavioral health systems are:

  • Centered on youth and their families
  • Focused on equity
  • Provided in the least restrictive setting
  • Tailored for youth based on a comprehensive array of services
  • Built on housing and stable living arrangements as a foundational support
  • Coordinated across youth-facing systems to make it easy for families to navigate

Specific Medicaid Strategies

Medicaid, the primary payer of behavioral health treatment for high-risk children and youth, can act as a linchpin for states seeking to address youth homelessness following inpatient/residential stays. Key strategies that states can implement include:

  • Expanding coverage and access to the full continuum of behavioral health and housing services that promote the use of community-based care, divert youth from residential/inpatient services, and support youth transitioning from residential/inpatient services in order to mitigate youth homelessness.
    • Example: Ensuring Medicaid coverage of intensive in-home support services.
  • Reframing the approach to residential/inpatient behavioral health treatment to identify youth at high risk of institutionalization early to avoid stays to the extent possible and reframe required stays as part of a continuum of care with clear discharge plans centered on supporting the youth in the community.
    • Example: Using Medicaid to reinforce and enhance the requirement that discharge planning begin upon admission.
  • Prohibiting residential/inpatient facilities from discharging youth to homelessness, using legal requirements to ensure that youth are not discharged to homelessness.
    • Example: Legislatively requiring the development of a statewide plan to ensure that all young people discharged from publicly funded systems exit into safe and secure housing rather than homelessness.
  • Supporting families of youth at risk of inpatient/residential treatment by engaging them in their child’s or loved one’s treatment and providing them with tools to navigate the behavioral health treatment landscape.
    • Example: Educating and supporting families before, during and after treatment through family resource centers funded by Medicaid.
  • Driving alignment and cross-agency coordination to organize the continuum of children’s behavioral health services to better serve youth with behavioral health needs and their families.
    • Example: Implementing a Systems of Care (SOC) model.
  • Increasing oversight and accountability to ensure that providers and managed care organizations (MCOs) are meeting Medicaid requirements by using performance review tools, carrots and sticks.
    • Example: Establishing Centers of Excellence (COEs) to deliver training and technical assistance to providers and MCOs as they implement new requirements, services and practice transformation.

Next Steps

Along with reviewing and taking up some of the Medicaid strategies listed above, there are a series of concrete steps that states and lawmakers can adopt to establish a meaningful process for addressing homelessness among youth with behavioral health needs, including to:

  • Establish cross-agency working groups with early and active participation of youth and families with lived experience.
  • Conduct a comprehensive review of current policies, including on the continuum of care available for children and youth, residential/inpatient admissions, care provided during residential/inpatient stays, and discharge policies.
  • Engage a broad range of stakeholders to identify key measures of success.
  • Design and implement policies to improve care combined with new support and accountability.
  • Review data available to the state to understand the scope of youth homelessness and the intersection with youth with behavioral health needs, as well as to measure progress.

While the behavioral health crisis facing youth and young people is daunting, there are a variety of tools and opportunities available for states to improve the delivery of behavioral health care and address homelessness among youth with significant needs.

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